Lesson one of Investment: What Should I invest in?

Investment Strategy Notes from Rich Dad's Guide to Investing

Investing is a long-term guide for anyone who wants to become a rich investor and learn how to invest in what only rich people invest in. This is not a guarantee. It is simply part of your education as a business investor. You cannot just get rich quick, because that would also guarantee you will lose your fortune as soon as you get it. You need to educate and understand what is happening whether you trade Forex, Options, Futures…any hype that tells you there is no work to it is lying.

"It's the first million that is the hardest"

In 1930, Joseph Kennedy pushed for the creation of the SEC or Security and Exchange Commission afte rthe stock market crash of 1929. The government body was formed in order to protect the public from unscrupulous dealers. Ironoically, this same Commission that was formed to protect the public from bad deals also keeps them from the best investment deals.

What are the types of investors?

Only the rich can invest in certain types of investments. An accredited investor is someone who is qualified to invest because:
*He or she has a net worth of $1 million or more
*He or she has an annual income of $200,000 who has a reasonable expectation of reaching the same income level in the current year.
*He or she can put up the minimum investment unit for accredited investors, $35,000.

A Sophisticated Investor has the 3 E's:

Education
Experience
Excessive Cash

An investor may be "qualified" in terms of annual income, but may not be considered "Sophisticated" because he or she lacks the knowledge and experience in investments.

Here are some investments of accredited and sophisticated investors:
*Private placements
*Real estate syndication and limited partnerships
*Pre-initial public offerings (IPO's)
*IPO's (While available to all investors, IPO's are not usually easily accessible)
*Sub-prime financing
*Mergers and acquisitions
*Loans for start-ups
*Hedge funds

The Five Phases Rich Dad sets for becoming a Sophisticated Investor:

1. Are you mentally prepared to be an investor?
2. What type of investor do you want to become?
3.How do you build a strong business?
4.Who is a sophisticated investor?
5. Giving it back

See Investment Strategy Notes for more notes on how to pave your way towards financial freedom